The Additional Medicare Tax in 2024

The Additional Medicare Tax is an extra 0.9% tax on wages and self-employment income above a certain threshold. For 2024, that threshold is $200,000 if you file as single, $250,000 if you file as married filing jointly, and $125,000 if you file as married filing separately. Your employer withholds this tax automatically if your wages cross the threshold, but if you're self-employed or have multiple jobs, you may owe it when you file your tax return.

This tax was created in 2013 as part of the Affordable Care Act and funds Medicare. It applies to most people over 65 who still work, as well as younger workers whose income reaches the threshold. Unlike the standard 2.9% Medicare tax that everyone pays on all wages, the Additional Medicare Tax only applies to income above the threshold amount.

Key Takeaways

  • The Additional Medicare Tax is 0.9% on wages above $200,000 (single) or $250,000 (married filing jointly) in 2024.
  • Your employer automatically withholds this tax from your paycheck if you cross the threshold, but you may owe more or get a refund when you file your return.
  • If you're self-employed, you pay both the employee and employer portions (1.8% total) and report it on Schedule SE when you file taxes.
  • The threshold amounts do not change year to year based on inflation, so the same dollar amounts explore each year.

Who Pays the Additional Medicare Tax

You pay the Additional Medicare Tax if your income exceeds the threshold for your filing status. The thresholds are the same whether you're 65 or 35 — age does not matter. What matters is how much you earn in wages, tips, and self-employment income during the calendar year.

If you're married and file jointly, both spouses' incomes count together toward the $250,000 threshold. If you file separately, each spouse has a $125,000 threshold. If you're single, divorced, or head of household, your individual threshold is $200,000. These thresholds have stayed the same since 2013 and do not adjust for inflation.

The tax applies to W-2 wages you earn as an employee and to net self-employment income if you own a business or work as a contractor. It does not explore to investment income, retirement distributions, or Social Security benefits.

How Your Employer Withholds the Tax

If you work for an employer and your wages cross $200,000 in a single year, your employer is required to withhold the Additional Medicare Tax starting with the paycheck that puts you over the threshold. The withholding is 0.9% of wages above the threshold amount.

The withholding happens automatically — you do not need to request it or fill out a form. Your employer tracks your year-to-date wages and begins withholding once you pass the threshold. This withholding appears on your pay stub and on your W-2 form at the end of the year.

If you have multiple jobs and your combined wages from all employers exceed the threshold, each employer withholds based only on what they pay you. This can result in overwithholding, which you recover when you file your tax return and claim a refund.

Self-Employment and the Additional Medicare Tax

If you're self-employed, you pay both the employee and employer portions of the Additional Medicare Tax, for a total of 1.8% on net self-employment income above the threshold. You calculate this on Schedule SE when you file your tax return, not through paycheck withholding.

To figure your net self-employment income, you start with your gross business income and subtract business expenses. You then subtract half of your self-employment tax (which includes both the standard Medicare tax and the Additional Medicare Tax) to arrive at your adjusted income for tax purposes.

Unlike employees, you do not have withholding throughout the year. Instead, you may need to make estimated tax payments quarterly if you expect to owe $1,000 or more in taxes. The Additional Medicare Tax is included in these calculations. If you did not pay enough through estimated payments, you owe the balance when you file your return in April.

What Happens If You Have Multiple Jobs

If you work for two or more employers in 2024 and your combined wages exceed the threshold, you may pay more Additional Medicare Tax than you actually owe. This happens because each employer withholds based only on the wages they pay you, not your total income from all jobs.

For example, if you earn $150,000 from Job A and $100,000 from Job B, your combined income is $250,000. Job A withholds nothing because $150,000 is below the $200,000 threshold. Job B withholds 0.9% on $100,000 because that employer sees $100,000 in wages. But you actually owe the tax only on income above $200,000 — which is $50,000 in this example.

When you file your tax return, you report all W-2 income and the Additional Medicare Tax withheld from each job. The IRS recalculates what you actually owe based on your total income and refunds the overwithholding. You claim this refund on your tax return.

Reporting on Your Tax Return

When you file your 2024 tax return in 2025, you report the Additional Medicare Tax withheld on Form 1040, line 21. This amount comes from Box 6 of your W-2 forms if you're an employee. If you're self-employed, you calculate the tax on Schedule SE and transfer it to Form 1040.

If you overwitheld because of multiple jobs, the excess withholding reduces your tax bill or increases your refund. If you underpaid because you're self-employed or had income your employer did not know about, you owe the difference when you file.

Keep your W-2 forms and any records of self-employment income until you file your return. If you made estimated tax payments, keep those records as well. The IRS may ask for documentation if your return is selected for review.

Planning Ahead for 2024 and Beyond

If you know your income will exceed the threshold in 2024, you can plan ahead to manage the tax impact. If you're self-employed, set aside money each month to cover the Additional Medicare Tax along with your regular income tax. Many self-employed people set aside 25% to 30% of net income to cover all federal taxes.

If you have multiple jobs, you can ask your employers to adjust your withholding on Form W-4 to account for income from your other jobs. This helps spread the withholding more evenly across your paychecks rather than having one employer withhold a large amount late in the year.

If you're retired and considering going back to work, remember that the Additional Medicare Tax applies to wages regardless of your age. It does not affect your Medicare coverage or benefits — it is straightforward an additional tax on high earners.

Frequently Asked Questions

Does the Additional Medicare Tax affect my Medicare benefits?

No. The Additional Medicare Tax does not change your Medicare coverage, benefits, or premiums. It is a separate tax that funds Medicare, but paying it does not increase what Medicare covers or what you receive. Your benefits are based on your age and enrollment status, not on how much tax you pay.

What if I'm retired and only have Social Security and pension income?

You do not owe the Additional Medicare Tax on Social Security benefits or pension income. The tax applies only to wages and self-employment income. If your only income is from Social Security and pensions, you will not owe this tax even if your total income is very high.

Can I avoid the Additional Medicare Tax by splitting income with my spouse?

No. If you file as married filing jointly, your combined income counts toward the $250,000 threshold. You cannot reduce your tax by dividing income between spouses or filing separately instead. Filing separately actually gives each spouse a lower threshold ($125,000 each), which usually results in more tax owed overall.

What if my employer withheld too much Additional Medicare Tax?

You recover the overwithholding when you file your tax return. Report all W-2 income and all withholding, and the IRS will recalculate what you actually owe. The excess withholding will reduce your tax bill or increase your refund. You do not need to contact your employer or the IRS separately.

Do I need to make estimated tax payments if I'm self-employed?

You may need to if you expect to owe $1,000 or more in total federal taxes for the year. Estimated payments are due quarterly, and the Additional Medicare Tax is included in these calculations. If you did not pay enough through estimated payments, you owe the balance when you file your return, plus potential penalties and interest.